Demonetisation in India

My take on the current demonetisation situation:

1. In current political climate it is suicidal to accept that you have made a mistake. BJP government will therefore not admit to any failings. Nevertheless, the implementation and benefits at this stage are unlikely to exceed the costs from current point of view.

2. Let this be a lesson for all leaders who think revolutionary changes are cool/ they can change a large entrenched, rotten system overnight with few, big moves. Ideas of Arthkranti (the guys who gave this idea to Modi), while appealing on paper, have no historical precedence of actually working. Changes need to be incremental, systematic and well thought of. Disruption is not always good and change is always slow & painful.

3. Modi has seriously underestimated the will of 97% people to evade taxes and stay out of the system by any means possible. It is not easy to seek people's direct cooperation to act against their self-interest, even if the move benefits the whole society.  

4. If Modi wants to salvage the situation, he can use the chaos and confusion created by this move to push through serious reforms to tackle root problems. Tax raids, pushing digital transactions, stronger anti-tax evasion rules and marginal tax on gold to enable tracking gold transactions are steps in the right direction. Bringing in the right to service act as envisioned by Dr JP + continual shift towards e-governance will stem more corruption than demonetisation. 

5. It is time to bring in laws to prevent disruption of Parliament

6. I still support Modi as I see him as a leader who intends to change the system for good. I have not seen any alternative leadership that I could trust more. I would happily support any national leader who offers a constructive, reasonable intelligent plan and a leadership and is capable of forming a stable government at the centre.

7. The only people who make mistakes are the ones who try to do something. Nevertheless history rewards only success, as highway to hell is often paved with good intentions. Modi may do well to remember this.

Narendra Modi's Masterplan for Indian Economy

While I don't actually know what NaMo is thinking, given his actions to date I think his plan for the economy is on the following lines: 

1. Market India as an investor friendly country to get in FDI
2. Promote "Digital India" to encourage a part of economy that does not need big infrastructure spend, and use it to promote e-governance
3. Get manufacturing in India at least for domestic consumption (including defence) to create jobs and positive buzz. Defence export are less likely to be sensitive to transport costs (the penalty of poor infrastructure) and can boost Digital India
4. Start building the infrastructure required to ultimately enable India to export manufactured goods 

For the first three to be sustainable, reining in bureaucracy to be more business friendly  and judicial reforms to reduce end-to-end judgement times would be needed. We are already seeing steps to make the bureaucracy toe the line. Whether it will work or not is to be seen.

There is no concrete step on judicial reforms, which is a concern. However, as long as NaMo is in power, a compliant bureaucracy in itself will make a world of difference. If Modi goes out of power, most of the gains are likely to be lost without judicial reforms.

These changes are hard, but step 4 will be the hardest. Indian export in manufacturing at global scale is simply not possible without a highly developed infrastructure, including state of the art container ports, express ways for large container trucks, and a functioning fast freight container rail routes. Privatisation of freight rail, strategic layout of roads, and integrated deep water ports are needed to match the logistics advantage for manufacturing in China. To give you a perspective, right now 7 of the world's busiest container ports are in China, who has strategically invested in its infrastructure to brilliantly support exports. Without doing the same Make in India (for export and not just internal consumption) will never be viable, and digital India+defence exports can take you only so far. 

Even if Modi delivers factually, he needs to up his game regarding communication and rein in a lying, agenda based main stream media. It is time that media houses were held accountable for what they publish as factual news. You can't run a lie to tarnish somebody's reputation as main news for 20 hours and then publish the apology as side news for 2 minutes.

Overall, these steps, if executed reasonably, can provide India a significant boost and actually turn it into a world power. However, it is a difficult battle against entrenched socialist practices/culture of non-performance, corruption, and protectionism. Add in a biased, lying, agenda based main stream media and desperate fight for survival by the existing corrupt order, and this gets even more interesting. Of course some of out neighbours would like to see us derail as well. NaMo alone can do only so much. I just hope it is enough...

Globalization and Its Discontents

Just finished reading "Globalization and its Discontents" by Joseph Stiglitz. One thing is for sure: you will never read any news about IMF, bailouts, austerity packages and other related things in the same way as before after reading this book. Whether you are a die-hard capitalist or communist, you will find something to love or hate in this book. The book does not mince words to squarely lay blame at IMF's door for some of the biggest economic declines in the last 30 years or so, including Russia, East Asia and Latin America. Even if you do not have a very good idea about Macroeconomics, quite a few things would make sense. And if you do, this book would give you a lot of things to think about and chew on. Very nicely written book. Nevertheless, even though I recommend reading this book, there are some things in the book which I understand but don't agree with in terms of its feasibility in the real world.

Goodness and fairness are good to have. Unfortunately, goodness and fairness can permeate only from the strong. And nobody can teach that to the unwilling strong or moral-lecture the strong into being good. Such is the nature of power. And, as much as one may not like it, the world operates on principles of power and self-interest, which in turn derive their strength from how we are brought up. The question of making the world a better place is not simply the question of having the right policy: it is always possible to game a system. The question is about the basic human learning and understanding. If the values of humanity and universal brotherhood are not imbibed at an early stage, it is virtually impossible to get it later in life. The definitions of right and wrong, acceptable and unacceptable vary so wildly that it is nigh impossible to reach any kind of common standards. Further, it is fiendishly easy to use, abuse and mislead an economically deprived crowd. So, it is in the interest of most political leaders to keep things that way. There are simply too powerful vested interests that do not understand the meaning of fair or good. For them might is right, and so the world moves on. This problem will not be solved with intellectual discussions.

The book also comes down to some veiled rich-bashing, blaming the rich for all ills, and poor are generally exonerated by virtue of their suffering or their mistakes are generally toned down. Nobody forces anybody to take a loan. To live within one's means and getting the house in order is one's own responsibility. Fairness is good to preach, but as far as the eyes of history go, it has never-ever been successful. Is it desirable? Definitely. Is it possible? No. Yes, we can try. But it is good to know the odds you face. It may be good to build consensus and avoid hubris, but avoiding hubris and working with a committee are two different things. Making the collective wiser than the individual is a skill that very few have.

Overall, I find the book's position centrist, leaning a little towards left. The writer is also either naive or idealistic to assume that the world should operate on principles of fairness on its own account. The truth remains that in this world powerful rule over the weak. As somebody said, the meek shall inherit the earth but not the mineral rights! The writer is right to point out the imbalances and unfairness, but his approach is solve the problem is somewhat idealistic.